Multi Member LLC - Had Several Fixed Assets Stolen

[catherine3]

I have a multi member LLC client. They are a camera equipment rental house. Their facility was robbed and several items were stolen - basis value of $108,000. How do I record this in Pro Series. Do I just go to asset entry worksheet that I used for each item in the previous years and treat it as a disposition and use $0 for the sale price? The insurance company paid them replacement cost of $213,000. Consequently, they are in a better position by $105,000. Is that difference between the loss and the insurance money taxable? Is there anything else that I need to do to record the robbery loss? Thank you in advance to anyone who can help.

[Accountant-Man]

What kind of business tax return?

Yes, $105,000 is income.

[catherine3]

Form 1065

[taxes96786]

Is it possible that the excess covers the cost of replacing the items. Perhaps the current cost of the stolen items is higher than the FMV of the stolen items.

[sjrcpa]

Did they buy replacement equipment?

Or did they just take the money?

[Skylane · Accepted solution]

Sounds like there’s a 4868 in your future… section B

https://www.irs.gov/pub/irs-pdf/i4684.pdf

https://www.irs.gov/pub/irs-pdf/i4684.pdf

assuming the cameras were replaced to the extent of the insurance company payout income will be shown.. PS handles it well on a 1040. I’ve never tried on a 1065.

[Skylane]

@taxes96786  Yes, it is likely that the insurance coverage was on a replacement cost basis. In order to get the full value of the claim from the insurance company, the insured must replace the property and provide proof. 

@catherine3  you’re correct that  the disposition of old assets will be 0. New depreciation for the replacement equipment. I assume sec 179 may be used to extent allowable. @Accountant-Man knows business returns better than me.

[sjrcpa]

There is a rule for involuntary conversions. See IRC Section 1033.

[Skylane]

@sjrcpa thanks. Forgot.

[catherine3]

Thank you.